Vaden v. Discover Bank

556 U.S. 49, 129 S. Ct. 1262, 173 L. Ed. 2d 206 (2009)

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Vaden v. Discover Bank

United States Supreme Court
556 U.S. 49, 129 S. Ct. 1262, 173 L. Ed. 2d 206 (2009)

  • Written by Alexander Hager-DeMyer, JD

Facts

Betty Vaden (defendant) was a credit cardholder with an affiliate of Discover Bank (Discover) (plaintiff). As part of the application, Vaden signed a cardholder agreement with Discover that contained an arbitration clause. Vaden had past-due charges, and Discover filed suit in Maryland state court, using only state-law claims, to recover the funds. Vaden answered and counterclaimed against Discover, stating that Discover’s fee policies and interest rates violated state law. Discover then petitioned a federal district court to compel arbitration of the counterclaims under § 4 of the Federal Arbitration Act (FAA), citing its cardholder agreement. Discover claimed that the district court had jurisdiction over the dispute because federal banking laws preempted Vaden’s state-law counterclaims. Vaden conceded that the federal banking laws did preempt her state-law claims. The district court agreed and compelled arbitration, finding that a federal court had jurisdiction if the underlying dispute posed a federal question. Vaden appealed to the Fourth Circuit, which remanded the case and then affirmed upon a second appeal. Vaden appealed again to the United States Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Ginsburg, J.)

Concurrence/Dissent (Roberts, C.J.)

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